I'm not sure I understand what this means. If the HFTs "took their balls and went home", there would be that much less liquidity available as a certainty. The fact that some electronic orders get cancelled doesn't subtract from the orders that don't get cancelled. In other words: the average spread is the average spread regardless of how many "probing" orders are cancelled, and lower spreads are better.
From what I can tell, these issues come into play primarily in two scenarios:
(a) market orders with traders demanding immediate liquidity at the expense of optimal pricing, and
(b) complicated hedged trades in which traders are depending on the synchronization of two different sets of correlated limit orders.
Well, as I understand it sort of the whole point of a market maker is that you don't "take your ball and go home". Traditional market makers are obligated not to do that.
If HFTs want to be hailed as more efficient market makers, they should operate under the same obligation.
Market markets (human, mechanical, hydraulic, electronic) are obligated to trade, but they are not obligated to trade at any particular price. They survive by constantly repricing their best bid/ask. They do that by... wait for it... canceling resting limit orders, and replacing them with orders at different prices.
From what I can tell, these issues come into play primarily in two scenarios:
(a) market orders with traders demanding immediate liquidity at the expense of optimal pricing, and
(b) complicated hedged trades in which traders are depending on the synchronization of two different sets of correlated limit orders.